Paolo Gentiloni named new Italy prime minister

Paolo Gentiloni was named Sunday as Italy's new prime minister following reformist leader Matteo Renzi's resignation in the wake of a crushing referendum defeat.

Gentiloni, who had been Renzi's foreign minister, was asked by President Sergio Mattarella to form a new government that will guide Italy to elections due by February 2018, a presidency spokesman announced.

Gentiloni, 62, is seen as a close ally of Renzi who is unlikely to get in the way of the outgoing premier's plans for a political comeback.

Gentiloni now has to put together his own government line up which is expected to be put to a parliamentary confidence vote on Wednesday.

Mattarella had vowed Saturday to move quickly to fill the void created by Renzi's departure, saying the country urgently needed a new administration to handle a string of pressing problems.

Chief among those is a looming crisis in the troubled banking sector and ongoing relief efforts after a series of deadly earthquakes between August and October.

#BuonaDomenica al futuro cessionario di sovranità @PaoloGentiloni ripetiamo come il "potrebbe l'italia" sia andato a finire l'ultima volta.. pic.twitter.com/1yDv8Lcig8

— πόλις νικηφορία (@2piedi) December 11, 2016

Puppet premier?

Chief among those is a looming crisis in the troubled banking sector and ongoing relief efforts after a series of deadly earthquakes between August and October. Gentiloni, 62, is a close ally of Renzi and will be seen by the opposition as a puppet premier keeping the seat warm for his colleague, who is planning a comeback at the next election. That is due by February 2018 but could take place up to a year early. Five Star, Italy's biggest opposition party, and the far-right Northern League are demanding a vote as soon as possible. But Mattarella, who enjoys extensive executive powers during government crises, said Saturday an election could take place only after revision of current electoral laws. Theoretically that could happen quickly but the process of harmonising the rules governing elections to the two houses of parliament, the Chamber of Deputies and the Senate, could also drag on for months. As things stand, the lower house would be elected by a system under which the largest party is guaranteed a majority of seats while the Senate would be voted in under a proportional representation system. Most observers agree that this is a recipe for perpetual conflict and government gridlock as the two chambers have equal powers.

Italy's @PaoloGentiloni says what's at stake" in Sunday's vote is much more "than the content of the referendum.” https://t.co/iucCrvdu2B — Christiane Amanpour (@camanpour) December 1, 2016

Small investors' fury

The situation could be simplified at the end of January, when the constitutional court is due to rule on the legitimacy of the new winner-take-all system for the Chamber of Deputies. Gentiloni has served as foreign minister since October 2014, having been plucked by Renzi from back bench obscurity to replace the current EU foreign policy chief, Federica Mogherini.

His only previous government experience was two years as Romano Prodi's communications minister from 2006-08. He is a longstanding friend and ally of Renzi and cynics will say that the silver-haired, grey-suited deputy's primary qualification for the job is that he poses no threat to the outgoing premier's comeback plans.

A registered journalist, Gentiloni has been either a full-time activist or a politician since his days as a far-left political science student in the mid-1970s. The toughest task he will have as premier is overseeing a rescue of troubled bank Monte dei Paschi di Siena (BMPS).

A state-funded salvage operation is seen as inevitable following the European Central Bank's refusal on Friday to allow more time for a private bailout.

Under EU rules, state funds can be injected into troubled banks only if private creditors accept losses. In the case of BMPS this could hit many small investors who hold the bank's junior bonds.

Imposing losses at smaller banks last year caused outrage in Italy and damaged Renzi's standing.